01-05-2025
Making Clean Energy Credits Count: What the IRA Means for Your Bottom Line
Clean energy is accelerating, and the Inflation Reduction Act (IRA) is a major driver. It introduced the largest package of federal clean energy tax incentives in U.S. history, with significant implications for developers, investors, and manufacturers across the sector. But taking advantage of these incentives isn't automatic. The credits come with detailed rules around eligibility, documentation, labor standards, and project design. Structuring a project correctly from the start can mean the difference between maximizing available credits or missing out on substantial savings. This guide breaks down the key tax credits, how they work, and the practical considerations that determine whether they deliver real financial value.
The IRA expanded and extended several major tax credits. Here's what matters most for energy developers and investors:
Investment Tax Credit (ITC). The ITC allows project owners to deduct a percentage of eligible project costs from their federal taxes. The base rate is 6%, but this can increase to 30% or more if certain labor and domestic content requirements are met. Qualifying technologies include solar, wind, battery storage, biogas, and microgrids.
Production Tax Credit (PTC). Unlike the ITC, the PTC provides a per-kilowatt-hour credit over a 10-year period, rewarding production over time. For wind, solar, and other eligible technologies, it's especially appealing for projects with strong long-term generation capacity. The decision between PTC and ITC often comes down to the scale and projected output of the project.
Section 48C Advanced Energy Project Credit. This credit targets manufacturers that produce clean energy components—solar panels, inverters, battery cells, and related infrastructure. It's especially valuable if your facility is located in an 'energy community,' such as a former coal or fossil-fuel-dependent area.
As certified public accountants (CPAs), our role is to translate policy into practical financial planning. These credits are not automatic—they come with detailed qualifications, reporting requirements, and compliance obligations. Here are several areas where CPA guidance is essential. Credit Selection and Financial Modeling. We start by modeling both credit pathways (ITC vs. PTC) to determine which structure aligns better with your project's cash flow, tax position, and long-term goals. For example, developers with limited tax liability may favor PTCs if they can bring in tax equity partners, while those seeking upfront capital might prefer ITCs. Stacking Bonus Credits. The IRA offers additional 'bonus credits' that can substantially increase the value of your base credit. Examples include:
Domestic Content Bonus. For using U.S.-manufactured materials.
Energy Community Bonus. For locating projects in certain qualified geographic zones.
Prevailing Wage and Apprenticeship Bonuses. For meeting labor standards throughout construction and operation.
These add-ons can push total credits to between 40% and 70% of eligible costs—but only if your project is structured accordingly from the outset. We work with clients during early-stage planning to ensure the required documentation and standards are in place. Credit Monetization and Tax Equity Structuring. A key innovation under the IRA is the ability to transfer or sell tax credits. That means even entities with little or no federal tax liability can unlock their value. Alternatively, traditional tax equity financing structures—such as partnership flips or sale-leasebacks—remain viable. We assist clients in comparing these options based on cost, risk, and timing of funds. Compliance and Recordkeeping. The IRS has tied these incentives to rigorous compliance obligations, particularly around labor standards and domestic sourcing. The consequences of falling short—recapture of credits or disqualification—can be severe. We help clients implement systems to track payroll, materials sourcing, and energy production, and prepare the documentation needed for potential audits or investor due diligence.
The IRA has changed the clean energy landscape—not just from a policy standpoint, but financially. However, unlocking its value requires more than just reading the statute. It demands detailed financial planning, early-stage strategic decisions, and strict operational discipline. CPAs in this space play a critical advisory role: analyzing tax credit structures, optimizing capital stacks, ensuring compliance, and mitigating risks. For energy developers and manufacturers, this isn't just a tax opportunity—it's a competitive advantage. If you're planning a clean energy project in the next 12 to 24 months, now is the time to sit down with an advisor who understands both the technical tax framework and the industry-specific considerations. — is the founder of Miller & Company LLP, a New York-based CPA firm focused on tax strategy, advisory, and compliance for businesses in the energy, real estate, and manufacturing sectors.
